Sole Trader or Limited Company: Your Business Structure
Starting a business? One of your first big decisions is whether to be a sole trader or form a limited company. Understanding the basics is key!
Sole Trader: Simple and Straightforward
Easy setup: You are the business, minimal paperwork.
Complete control: All business decisions are yours.
Taxes: Pay Income Tax on profits, plus National Insurance.
Risk: No separation between you and the business – personal assets could be at risk.
Limited Company: Protection and Potential
Limited liability: Your personal assets are generally safe from business debts.
Tax flexibility: Corporation Tax can be lower than Income Tax. More ways to manage your income.
Credibility: Some clients perceive limited companies as more established.
Admin: More paperwork, like annual accounts for Companies House.
How to Decide
Risk tolerance: Worried about liability? Limited company is safer.
Growth plans: Scaling a business is often easier with a limited company.
Taxes: Talk to an accountant for personalised estimations.
Comfort with paperwork: Sole trader offers the simplest administration.
Remember: You can always switch structures later! Many start-ups begin as sole traders and incorporate when they grow.
Get More Help:
Accountant: Provides tailored advice for your circumstances.
Coming Up! We'll be taking a deep dive into the pros, cons, and practicalities of both sole trader and limited company structures. Stay tuned for more detailed information to guide your decision.
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